As negative electricity prices become more common in Europe due to surging renewable energy production, commodity traders like Castleton Commodities International (CCI), Vitol, and Trafigura are investing heavily in utility-scale battery storage. These batteries help stabilize power markets by storing excess electricity during low-demand periods and selling it when demand spikes. CCI plans to invest up to $1 billion in European storage projects by 2027, according to Bloomberg. Falling battery costs, extreme price volatility, and growing grid stress have made storage a profitable and essential part of modern energy trading. They write:
Three years ago, Castleton Commodities International analysts huddled in their London office to discuss how to make money from a growing phenomenon in the European power market — negative prices.
The dislocated markets and sharp price swings they saw are exactly the type of conditions that commodity traders like CCI thrive on. But the problem is that storing electricity when it’s not needed and selling when prices are higher is much harder than for other commodities like copper or oil. […]
Harnessing batteries and the trading opportunities they bring can help alleviate these problems, by charging up when there’s excess power and selling later when renewable generation dips. The technology’s role in ensuring energy security was also highlighted by widespread blackouts in Spain and Portugal this year. […]
Some of the biggest barriers to entering the market for large-scale batteries include getting access to sites to build and, crucially, rights to connect to the grid. For those who’ve been able to do that while benefiting from cheaper batteries, the business case is only getting better.
“The cost of a new battery has come down to the tune of 50% in the last two years and that’s been a very, very positive development for people that moved in early like us and that had the chance to build in all these plots,” Pilo said.
Read more here.
